Briefly Describe the Purpose of the Standard Identified in the Previous

question 27

Essay

Briefly describe the purpose of the standard identified in the previous question, and give at least two components.

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Definitions:

Stock Ownerships

The possession of shares in a company, which represent a claim on the company's assets and earnings.

Potentially Higher Returns

The prospect of gaining returns on investment that exceed average or expected levels, often associated with higher risk.

Bonds

Fixed-income financial instruments that represent a loan made by an investor to a borrower, typically corporate or governmental, which is obliged to pay back with interest.

Sensitivity Analysis

A method to assess the riskiness of a capital investment by forecasting the most optimistic, the normal, and the most pessimistic outcomes possible under reasonable circumstances.